Published on 24 April 2015
RAM Ratings opines that the passing of the
Public Sector Home Financing Board Act 2015, which was reported by the
media on 10 April 2015, has no immediate rating impact on Cagamas MBS
Berhad (Cagamas MBS). The Act had been passed by Parliament, following 2
readings, i.e. on 26 March and 2 April 2015. As a consequence, the
existing Housing Loans Fund Act 1971 (Act 42) will be repealed while all
the assets and liabilities of Bahagian Pinjaman Perumahan (BPP) will be
vested to a separate body corporate (i.e. the Public Sector Home
Financing Board or the Board).
BPP is the primary servicer of Cagamas MBS’s
securitisation transactions that are backed by government home-financing
facilities, i.e. CMBS 2005-1, CMBS 2005-2, CMBS 2007-1-i and CMBS
2007-2 (collectively, the transactions), which all carry AAA/Stable
ratings. Cagamas MBS is a limited-purpose entity incorporated for the
purpose of securitising government staff housing loans and government
staff Islamic home-financing facilities.
Beyond the passing of the Bill, further details with
regards to the implementation of the Board have not been disclosed. We
do not foresee major changes to the transactions’ servicing quality in
the immediate term despite potential administrative issues that may
arise during the transition period. Nevertheless, RAM will continue to
monitor the developments on this front and the potential impact, if any,
on the transactions.
Based on the Bill that had been passed, the Board
will be responsible for collecting and recovering the repayments on
public-sector home financing, which is undertaken through direct
deductions from the borrowers’ salaries or pensions, as well as legal
proceedings (for mortgages-in-arrears). The Board will be
self-financing, by way of borrowings (subject to the approval of the
appointed finance minister) and collections from the mortgage pools, but
may receive provisions from Parliament. Moreover, the Board will have
autonomy over its human resources, although the appointment of the CEO
will require the approval of the finance minister, who will also appoint
several board members.
| Transaction |
Total issue amount (RM billion)
|
Issue rating
|
|
Sukuk Musyarakah Islamic residential mortgage-backed securities, CMBS 2005- 1 |
2.05
|
AAA/Stable
|
|
Residential mortgage-backed securities, CMBS 2005-2 |
2.06
|
AAA/Stable
|
|
Sukuk Musyarakah Islamic residential mortgage-backed securities, CMBS 2007-1-i |
2.11
|
AAA/Stable
|
|
Residential mortgage-backed securities, CMBS 2007-2 |
2.41
|
AAA/Stable
|
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